Benefits and drawbacks of IoT for SMEs

Understanding the advantages and challenges of IoT for small businesses

The Internet of Things gives the business devices and software you use daily the ability to connect to the Internet and share valuable information. For SMEs, this can be revolutionary. Not just in terms of fancy gadgets, but real, tangible benefits for your business. But how does this translate to your customers? And what should you look out for when introducing IoT technology?

In this article, you’ll learn the pros and cons of integrating IoT into your business and what to expect from it. Crucially, we also list out many ways it can benefit your customer. To hear about all IoT challenges and benefits, read on.

What are the pros of IoT?


When it comes to the Internet of Things, devices ‘talk’ to each other seamlessly, helping to improving the efficiency of your business operations. This gives you the chance to optimise daily schedules and reduce the need to spend time on tasks that are now handled by IoT.

Decision making

IoT generates an abundance of data. This data gives you incredibly valuable insights into a variety of aspects of your business, from consumer behaviour to your overall operations. Using this information empowers you to make data-driven decisions, helping your business to grow and remain agile.

Customer experience

IoT gives you the opportunity to personalise interactions with your customers. The level of customer support the IoT offers[2] gives you a significant advantage in helping you meet their needs effectively, improving relationships and building loyalty.

Competitive edge

Implementing IoT can benefit your business by giving it an advantage. By using its power to make things easier, you can help your business stand out in busy markets and appeal to tech-savvy customers.


By automating everyday tasks, IoT can help you reduce the requirement for manual input, ultimately saving you time and money. As well as helping manage your smart energy functions, IoT can help optimise other areas of business, such as logistics, which can be very beneficial when it comes to cost savings in the long run.

Sounds good right? However, if you are still struggling to see how this could tangibly benefit your business, we’ve laid out some simple examples of the benefits of IoT for customers. The Internet of Things can improve operations, track inventory and boost customer satisfaction amongst many other things.

Personalised offers

We’ve all had marketing emails from brands that make us search for the unsubscribe button. Not ideal for a growing business. IoT devices integrated into websites or checkout systems gather useful data to build detailed customer profiles and with this data, organisations can send personalised offers based on customer preferences, purchase history and shopping style. This means they get offers they’ll actually want to use.

Loyalty programmes

Loyalty programmes are a great way to keep customers and with IoT, you can make it fun and personalised. Research shows that 60% of customers shop with a brand that has a loyalty programme. It’s always good to get your 6th coffee free, or 10% off your 10th purchase, and IoT software such as smartphone apps can track the customers’ payments, offering rewards based on their preferences, and automatically adding points or discounts without any effort on their part.

Here are a few ways IoT could enhance your customers’ experience…

  • Send them a discount or free product on their birthday

  • Let them know when they’ve hit milestones (e.g. Congrats on your 10th visit!)

  • Send them offers on the items and services they purchase most

  • Automatically add their points and discounts to their account without them needing to do anything

  • Use any unique selling points (USP) you have and get creative!

Safety and security

Your customers want to feel safe when spending their money in-store or online with you, and including IoT in your security setup can help with that. IoT is like an improved security system that can help act as a barrier and provide real-time monitoring for peace of mind for you and your customers. Two-step verification, smart cameras, and alarm systems can be the silent guardians that make your customers feel secure and valued while building a reputation of trust and reliability.

Efficiency and effectiveness

It’s frustrating for customers when items are out of stock. IoT technology can track inventory levels with innovations such as shelf sensors that monitor numbers and send alerts when it's time to restock. Automated checkouts are also a familiar sight in stores as they help keep queues down and keep shopping efficient for those who use them. They are often the preferred option over traditional check-outs. In fact, it's predicted that 99% of European Supermarkets will have self-checkouts by 2025.


More people are now considering sustainability when making their purchases. In fact, a survey from McKinsey & Co revealed that 66% of all respondents consider sustainability when they make a purchase. With IoT, you can make your business more sustainable with cloud-based storage tools or accurate waste management reports, amongst others. IoT can also optimise energy usage by automating lighting and temperature systems based on occupancy or time of day helping to save the planet and helping you reach your sustainability goals.

What are the challenges of IoT for customers?

As with anything, with all the pros come some cons. When introducing IoT to your customers, you may experience some resistance. That’s normal - especially with customers who have been with you for a long time. The most important thing is to put your customers at the heart of your decision-making. You must consult with your target audience, consider identifying some early adopters and most importantly ensure you meet regulations and let customers know what data is collected and why.

Data protection

There is a fine line between collecting data to improve the customer experience, and your customers feeling like they’re being grilled for information each time they connect with you. In regards to personal data, organisations must abide by GDPR and any information that makes it possible for people to be identified publicly should be anonymized. For example, businesses that use IoT-enabled cameras should follow explicit standards of conduct and utilise the data they collect solely for clearly defined purposes.

Getting customers on board

Smart devices are already part of our everyday lives, and most people are happy to use IoT, but not everyone will be on board straight away. Some customers will be wary of handing over their data or simply clicking a button to agree without really knowing why - that’s understandable. Privacy is very important to us all so it’s your job as a business owner to explain and reassure wary customers that you’re doing all the right things to make IoT changes safe, positive, and practical.


While IoT can be great for many users, including those with disabilities, businesses must be sensitive to the fact that these changes aren’t going to be ideal for some customers. Adaptations will need to be made so that they do not feel excluded or left behind. Businesses should consider how the IoT changes they are implementing will impact all of their customers, including those with disabilities like sight or hearing issues.

Upfront costs

Adopting IoT technology can have some initial costs up front. From buying and installation, upgrades, and staff training - it can be a big investment.


The process of implementing IoT into your current business structure can be tricky. There are important factors to consider here, such as making sure you’re choosing the right devices, and building a network that can deal with the increase in data. It takes a lot of careful planning, and you should be prepared in case the integration causes any disruptions.

Security concerns

As there are so many interconnected parts of IoT, this fosters concerns around IoT security. Every connected device, appliance or piece of machinery is an opportunity for cyber threats, so it’s important to make sure there are powerful measures in place to prevent potential data breaches.


As with most technology, IoT is constantly evolving, which could make compatibility (especially using devices from different manufacturers) a problem. To avoid this, be sure to do your research beforehand and check that the IoT solutions you have your eye on work together and communicate seamlessly.


With IoT gathering so much data, you have a responsibility to keep it secure to safeguard privacy. Having clear policies around data and compliance with privacy regulations is essential, as well as showing your customers and employees that you take it seriously.

How to make IoT work for you and your customers

IoT is all about connectivity. Not just the obvious connection to the internet (although that’s key to this whole thing we’ll admit), but the connection it gives you to your customers and the connection it gives you to your business, from anywhere in the world. Businesses can thrive with IoT with access to the data they need to improve the customer experience considerably. So the key to making IoT work is to see it as a cooperative relationship. IoT, Customer, and Business all work seamlessly together.

Integrating IoT into your business isn't just about staying up to date with current technology trends, it's about giving your customers a positive experience and a reason to keep coming back. With the right IoT systems in place, your customers will thank you with their loyalty. However, it doesn’t come without potential challenges. Think about the pros and cons and how embracing IoT could work in your business and help you achieve your goals.

For more information on IoT within your business, you can speak with our friendly V-Hub Digital Advisers for 1-2-1 support.

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